The safety of temporary workers is a paramount concern for industrial staffing firms. Not only do many industrial temporary workers get placed in settings where the physical nature of work and presence of machinery pose elevated risks, but they typically encounter these settings as someone new to the specific location and less experienced with the specific work processes underway than those around them. As a result, industrial temporary workers are particularly vulnerable to work injuries and industrial staffing executives have an acute responsibility to set up safety processes, monitor workplace injuries and treatment, and manage their overall workers’ compensation program and expenses.

To assist industrial staffing executives in this challenging area, we recently published our report, Insights on Workers’ Compensation for Industrial Staffing Firms. We briefly share below some of the findings of the report.

One encouraging safety statistic is that the frequency of lost-time workers’ comp medical claims across all jobs has steadily declined since 1999, as shown in the graph, and injury frequency is now roughly half of what it was 18 years ago. This statistic is reported by NCCI, the private organization designated by 35 US states to handle the processing of workers’ compensation claims, loss and rate information.

Click on chart to enlarge.

While the exact drivers of the reduction in injuries are difficult to pinpoint, industry observers point to a steady pace of improvements that have occurred over time: mitigation of worksite hazards, improved work processes, better safety equipment, enhanced safety training and compliance, improved pre-hire screening of candidates and across-the-board efforts by company management to make work safer and prevent injuries.

With injuries occurring less frequently, one might expect that workers’ compensation costs are declining as well. However, there are several reasons why this may not be the case. The first reason is that the cost of medical care has risen significantly over the past two decades, resulting in a rising average cost per work injury. In addition, the cost of legal expenses and litigation related to workers’ compensation has increased, especially in states such as California. Lastly, industrial staffing firms may be experiencing a lower reduction in the rate of injuries then the trend shown in the graph, which represents workers across all industries.

Regardless of injury experience and trends, industrial staffing firms have an array of options for funding and managing their workers’ compensation program, and choosing between program structures can provide levers for reducing expense. Smaller staffing firms may benefit from the convenience of fully-insured “guaranteed cost” plans, where the insurance carrier provides bundled services including claims management, access to medical providers and legal services. Larger staffing firms may wish to use a high-deductible insurance plan or join a captive insurance group, effectively self-funding most of their workers’ compensation expense while selecting their own service providers for greater control.

While managing worker safety is a complicated task, industrial staffing firms have access to a number of resources to help them succeed. One such resource is the Temporary Worker Initiative, a set of publications and best practices produced in 2013 by OSHA and the National Institute of Occupational Safety and Health. We provide a concise summary of eight recommended practices from the initiative in our report.

The bottom line is that workers’ compensation expense continues to represent one of the largest financial responsibilities for industrial staffing firms. In an industry where operating income is often just a few percentage points of revenue, a large swing in workers’ compensation exposure can make or break profitability for industrial staffing firms. Fortunately, data and best practices for workers’ compensation management continue to become more available, enabling executives to both keep their associates safe and their company in the black.